On your quest to create the best estate plan possible, at some point, you might have been told by someone that joint accounts are an invaluable estate planning tool. After all, joint ownership allows you to avoid probate. Instead, when you own property as a joint tenant, both property owners have equal ownership in the property. This means that when you pass away, any assets that are jointly owned pass automatically to the other property owner.
While joint ownership does work in this way, this type of property ownership also presents many serious risks. As a result, it is a good idea to be cautious when thinking about jointly titling property.
Estate Planning Goals May Not be Achieved
After you pass away, the joint owner will receive sole rights over any property that you own. This means that the joint owner will be able to use the funds or property in any way that he or she sees fit. Not to mention, creditors of the other party will now be able to seize your assets. Consequently, there are several ways that your assets might be used or spent before they can achieve any goals that you had for your estate while you were still alive.
Unfair Results Among Children
If you have multiple children, you may want them to receive an equal share of your assets. Unfortunately, shared ownership can often lead to this goal being destroyed. This is one of the reasons why parents should be cautious about naming a child as a shared owner of an account. Similarly, if a second spouse is named as a joint account owner, there is a risk that the spouse might not equally share your assets with your children after your death.
Unanticipated Consequences With Asset Distribution
If tragic or unexpected events occur like the death of a child, the distribution of assets located in a joint account can have undesirable consequences. In these situations, the child will likely need to obtain the assistance of a conservator who can manage funds. In these situations, the distribution of your assets can have undesirable consequences.
When to Consider Utilizing a Joint Account
There are some reasons why you might decide to use a joint account or joint ownership. If you have only one child and want all of your assets to pass him or her, joint accounts can be a valuable way to provide for assets succession and management. Joint ownership can also be a good idea if you are only listing children on an account with few assets that are used to pay for daily living expenses. Otherwise, it is almost always the case that it is a better idea to utilize other estate planning tools like trusts, wills, and powers of attorney to achieve your estate planning goals.
Speak With an Experienced Estate Planning Lawyer
Estate planning is full of challenging questions, which can make it difficult if not impossible to decide how to structure your estate planning. Fortunately, a knowledgeable estate planning attorney can help. Contact attorney Jim A Lyon today to schedule a free case evaluation.